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The Stock Market --- Intermediate and Long-Term Analysis
The fellow that can only see a week ahead is always the popular fellow, for he is looking with the crowd.
But the one that can see years ahead, he has a telescope but he can't make anybody believe he has it.
Will Rogers, The Autobiography of Will Rogers, 1949.
All truths are easy to understand once they are discovered; the point is to discover them.
--Galileo
11 Years of Accurate Intermediate-Term Stock Market Forecasting
Using the Monthly Berg Timer
Above are compared the weekly Dow Industrials to the Monthly Berg Timer. Strong BT consistently marks market peaks and low BT marks market bottoms.
48 Years of Accurate Long-Term Stock Market Forecasting Using the Yearly Berg Timer
Below are compared 2-yr Berg Timer and yearly Dow average percent change since 1960 with forecast through 2010.
There's pretty good positive correlation here. You can see how BT forecasted the market doldrums of 1962, 1974, 1988 and 2001 and the hot market periods of 1964, 1972, 1983, 1995 and 2004.
It looks like a major bottom will be made in 2006, a strong market in 2007 and then a weak market in 2008 and 2009.
The Market and Sunshine
Below are compared Sky Cover (in tenths) average for each month in Omaha from 1970-1991 ('78-'85 not available) and the S&P 500 average percent gain/loss each month from 1951 to 1977.
Sky Cover is seasonal and so are stocks. High Cloudiness = Peaking Market (March, April, November and December). Low Cloudiness = Market Bottom (June through October).
"Psychological evidence and casual intuition predict that sunny weather is associated with upbeat mood. This paper examines the relation between whether a day is sunny and stock returns that day at 26 stock exchanges internationally from 1982-97. We find that sunshine is highly significantly correlated with daily stock returns."
Good Day Sunshine---Stock Returns and the Weather, David Hirshleifer and Tyler Shumway, August 17, 2001.
"Our analysis reveals that lower temperatures are indeed related to higher stock returns, and higher temperatures are related to lower stock returns. The relationship is significant both statistically and economically when the temperature is low, and is robust to various alternative tests."
"By examining nine market indices for eight international markets, we have indeed uncovered a temperature anomaly. Our analyses reveal a statistically significant relation between the temperature and stock market returns: the lower the temperature, the higher the stock returns, and vice versa. The relationship is much stronger when the temperature is low. Our results are also robust to alternative definitions of temperature variables and controlling for such known anomalies as the Monday effect, the tax loss effect, the cloud cover effect, and the seasonal affective disorder effect. Thus, our empirical evidence supports the hypothesis regarding lower temperatures vis-`a-vis higher stock returns, and reveals that apathy dominates aggression when the temperature is high, which results in lower stock returns."
Stock Market Returns---A Weather Anomaly, August 2002, Cao & Wei.
Above are compared the monthly Dow percent gain/loss and monthly cloudiness in Omaha from 1990 through 1996. Again, when skies are the most overcast, the market peaks and turns down. When skies are the most sunny, the market bottoms and starts its upturn. Evidently mass psychology, as reflected here in stock market prices, is affected by meteorological and/or atmospheric conditions.
The Market and Atmospheric Pressure
Below are compared the S&P500 monthly average and barometric pressure in Omaha.
The stock market makes major peaks and bottoms with barometric pressure peaks and bottoms.
If one had simply bought and sold at the bottom and top lines in pressure one would have been out at the major top in the Spring 1969, in on the major bottom in Mid-1970, out at the major peak in early 1973 and back in at the major bottom in late 1974. Again, mass psychology, as reflected in stock prices, is apparently affected by meteorological conditions.
This barometric pressure indicator was made by determining the monthly departure-from-normal pressure in Omaha Nebraska. Omaha is a good location for detecting these relationships. It catches all the weather fronts that come out of the Rockies as they make their way east.
Hits since October, 2005
